Tax Break Merry-Go-Round
Florida's tax law exemptions
The Florida Legislature started charging a sales tax 70 years ago. It’s been handing out tax exemptions ever since.
It gave one of the first sales-tax exemptions to an industry that once was among the state’s most influential: Newspapers. Buried deep inside the General Revenue Act of 1949 — tucked between sales tax breaks on garden seeds and film rentals — was a provision declaring newspapers exempt from the sales tax. The exemption applied to all newspaper sales, whether through a subscription, at a newsstand or from a vending bin.
Magazines weren’t happy. They decided their subscribers shouldn’t have to pay the sales tax, either. They sued, lost in court, but turned to lobbyists, and the Legislature added an exemption for magazines in 1957.
Next to seek an exemption were publishers of free publications — community newspapers and “shoppers” with lots of classified ads and little news like Morris Communications’ the Neighbor, a free publication the Georgia-based publisher distributed in Tampa. Since the publications were free, there were no taxes on sales to readers, but the publishers sought to have sales taxes lifted on the ink and paper they bought to produce the freebies.
The community papers were even joined by some traditional newspapers that published free weeklies and sought to stretch the boundaries of their original sales-tax exemption. Boca Raton Publishing, which was owned by Knight Ridder, the parent company of the Miami Herald, attempted to get out of the tax it paid on the ink and paper it bought to produce its free publications.
All lost in court. But then came the Alligator case. In 1980, the Department of Revenue charged the non-profit publisher of the independent student newspaper at the University of Florida for three years’ worth of unpaid sales tax on its printing-related purchases. The Alligator sued, arguing that it was being unfairly excluded from the newspaper tax break simply because it was free.
The 1st District Court of Appeal agreed, and that decision extended a tax break on the sale of a newspaper to the production costs of a free newspaper.
In 1987, the tax-exemption merry-goround screeched to a halt. In the course of enacting an ill-fated tax on services, the Legislature repealed a host of tax breaks — including the sales tax exemption for newspapers and magazines. The changes spurred intense criticism from the industries hit hardest by the changes — newspapers among them. And less than a year later, Gov. Bob Martinez and the Legislature repealed the services tax and doubled the sales tax.
In the process, they didn’t restore all the previous sales tax exemptions. But they did bring back some — including the exemption for newspapers. According to Tallahassee lore, the exemption for newspapers “came as a trade-off for the newspapers not trashing the Legislature — the Miami Herald was particularly out front on that,” says one former Department of Revenue staffer.
Magazines, furious, went back to court. The Magazine Publishers of America, Hearst Corp., Time Inc., Golf Digest/ Tennis Inc. and Meredith Corp. sued, arguing that Florida’s newspaper-only sales tax exemption unconstitutionally discriminated against one form of journalism over another. Newspapers, led by the Miami Herald, opposed the suit.
While newspapers and magazines fought in court, publishers of free publications resumed their lobbying push in the Legislature. And at the very end of the 1990 legislative session, lawmakers inserted an obscure provision into an enormous tax package that exempted shoppers, community newspapers and any other free publications that were “published on a regular basis” and whose content was “primarily advertising.”